Majority of voters want to see review of Central Bank lending rules

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A Newstalk/Red C poll released today has found that a majority of Irish voters want to see a review of Central Bank rules.

77% of Irish voters either slightly or strongly agree that “Mortgage regulations should be reviewed to make it easier for buyers to get on the property market or to trade up” – with 56% agreeing strongly, and 22% slightly agreeing.

Mortgage adviser Karl Deeter was in the studio with Pat Kenny this morning to discuss the poll results, and the Central Bank’s mortgage rules.

Deeter believes the rules hit first-time buyers the hardest, and he wants to see a finessing of the current rules, whereby reckless lending is still ruled out but larger loans are available to some borrowers, in the right circumstances.

“I’m definitely not in favour of reckless lending, reckless lending is awful. But a first time buyer getting a 90% loan when it’s done sensibly is a good thing.”

Current rules enable banks to have discretion on lending, lending 15% above 80% of a loan and 20% of loans can be above three times a borrower’s income.

This leniency is however taken up by “the best ones,” Deeter says. Those with the best jobs and salaries get preferential treatment, he says, with the result that people on the average wage will face a major problem in getting the backing to buy a home.

“Finance discriminates. It always has, it always will,” he says.

“If you’re a real regular Joe, by that I mean you’re earning the average wage in this country, about EUR35,000, and you’re looking to buy a house, you’re going to have to save up a huge amount while if you’re renting in the area paying out an extortionate amount of rent.

“The stringent rules are exacerbated by high prices in the rental market, which act like an unofficial tax,” Deeter says.